The stock market

[Hornhead]

 

You might want to wait a bit. I won't be surprised if the market drops another 20%.

Yeah, anticipating a decent drop tomorrow.  Funds won't appear in my Roth IRA account until Monday so I'll need to figure out when to pull the trigger on selecting my investments.  The virus scare may start to subside as China and Korea are on the road to recovery.  Not a lot of rationality out there so hard to say what direction the market will go.

[gunnarthor]

Looks like Mike's zoom purchases have worked out pretty well for him. Up 20 some percent since his purchase, I believe. 

 

Looks like today might the first day in six weeks with back to back positive numbers for the Dow and S&P. 

[Mike Sixel]

 

Looks like Mike's zoom purchases have worked out pretty well for him. Up 20 some percent since his purchase, I believe. 

 

Looks like today might the first day in six weeks with back to back positive numbers for the Dow and S&P. 

 

I locked in an 11% gain on Shopify in one day today. That was nice. I've already locked in zoom earnings twice in the last week. All this in my IRA I manage myself. I'm actually up for the year now....in that one at least.

[gunnarthor]

 

I locked in an 11% gain on Shopify in one day today. That was nice. I've already locked in zoom earnings twice in the last week. All this in my IRA I manage myself. I'm actually up for the year now....in that one at least.

I sold my stake in Shopify. Turned 5k into 42k. Appreciate the tip. I'm not allowed to make trades in my IRA account, very frustrating. But I'm not really a day trader so I haven't worried about it much.

 

At this point, just hoarding cash.

[gunnarthor]

Man, I hope some of you are making money off this market. For the life of me, I can't figure this one out. I was sure the jobless numbers would kill the market but it's still rallying.

[glunn]

 

Man, I hope some of you are making money off this market. For the life of me, I can't figure this one out. I was sure the jobless numbers would kill the market but it's still rallying.

I am betting that this is dead cat bounce, that will be followed by significant capitulation, followed by more bailouts, followed by a bottom. I hope that I am wrong. The human and economic toll of this looks worse every day.

[Richie the Rally Goat]

 

Man, I hope some of you are making money off this market. For the life of me, I can't figure this one out. I was sure the jobless numbers would kill the market but it's still rallying.

I think there's some logic getting lost in the algorithms, additional to glunn's post, the big institutional investors are buying/or selling, just to stay ahead of each other, not to hold an investment as a growth opportunity. Behind every Algo is  a human, but time is a great equalizer in that kind of trading. That's part of the difficulty in trying to find the bottom - there may be multiple dead cat bounces (there frequently are) but these feel more pronounced than '08 or '02 partially because of the Algos seem to feed off of each other, just like my favorite clip from the big short regarding the hot hand fallacy.  

[gunnarthor]

 

I am betting that this is dead cat bounce, that will be followed by significant capitulation, followed by more bailouts, followed by a bottom. I hope that I am wrong. The human and economic toll of this looks worse every day.

I think you are right (although with my betting performance in the last year, that's probably the kiss of death). An adviser at Wells Fargo told that they expect some falls, some more buying opportunities, followed by more downs. They seemed pessimistic but they are also based in Florida. 

 

 

[Mike Sixel]

I did quite well last week.....My one retirement account is up for the year.....and I made some short term money in my cash account.

 

This week? I'm sitting out right now, because we are going to see a huge drop again at some point, but I don't know when....so, maybe I'll bet on that with some options, we'll see. But if we really get to depression level unemployment, there is nowhere for this to go but down. I won't turn this into politics, but I can't see this federal government doing the things we did after the depression or WWII to get workers back to work.....

[glunn]

 

I think you are right (although with my betting performance in the last year, that's probably the kiss of death). An adviser at Wells Fargo told that they expect some falls, some more buying opportunities, followed by more downs. They seemed pessimistic but they are also based in Florida. 

I am hearing similar views..The bounce feels good, but I fear that bottoms could be tested.

[gunnarthor]

I thought this article was about right - https://www.bloomberg.com/news/articles/2020-04-15/all-the-views-of-how-the-stock-market-lost-its-grip-on-reality

 

I think there will be better places to buy in the next few months but I've been pretty good at not timing the market so what do I know?

[Mike Sixel]

I don't understand what is happening, but I've been day trading and sitting on UNH. I'm approaching being back to my peak...... bizarre.

 

I'll be buying Delta for the long run. Maybe Disney. Maybe Boeing

[gunnarthor]

Jesus, I should not have sold my stake in Shopify  

[Mike Sixel]

Jesus, I should not have sold my stake in Shopify

I've been buying and selling it for a few weeks. Should have just held it I guess. I sold a bunch yesterday that I bought earlier in the week.

[biggentleben]

How about this...when you guys want stock tips, I'll let you know what apps my wife is being told to add by all her friends with PTA and on Facebook, and you'll make millions.

 

Shopify was huge last fall among her FB/work friends and Zoom around Veteran's Day was the app to get from the PTA. I'll ask her what the next big one is tonight for you!

[glunn]

 

How about this...when you guys want stock tips, I'll let you know what apps my wife is being told to add by all her friends with PTA and on Facebook, and you'll make millions.

 

Shopify was huge last fall among her FB/work friends and Zoom around Veteran's Day was the app to get from the PTA. I'll ask her what the next big one is tonight for you!

I was hoping to have this pick before Monday.  

[glunn]

Oil below zero, and no place to store more. On the other hand, the air in Los Angeles has been very clean.

[ashbury]

Oil below zero

I literally don't know how this works. Some upstream drilling company contracts to supply X barrels of oil to downstream refiners for no money? Why?

 

Negative interest rates I can sort of construct a rationale for.

 

[glunn]

 

I literally don't know how this works. Some upstream drilling company contracts to supply X barrels of oil to downstream refiners for no money? Why?

 

Negative interest rates I can sort of construct a rationale for.
 

This is just a theory, but I have heard that it's expensive to completely shut down a well and then restart it later. In the meantime, there is very little storage available and they cannot just dump the oil.

 

If wish that everyone would fill their gas tanks now -- that might help some. And this might be a good time to look for additional storage for the U.S. strategic reserves.

 

In the meantime, this is probably going to decimate the oil industry. Thanks, OPEC.  

 

[Richie the Rally Goat]

This is just a theory, but I have heard that it's expensive to completely shut down a well and then restart it later. In the meantime, there is very little storage available and they cannot just dump the oil.

 

If wish that everyone would fill their gas tanks now -- that might help some. And this might be a good time to look for additional storage for the U.S. strategic reserves.

 

In the meantime, this is probably going to decimate the oil industry. Thanks, OPEC.

it’s futures contracts, meaning a refiner purchased that oil for future delivery, that you have to take delivery of on the day it comes due. It’s already out of the ground and has to go somewhere. You can sell that futures contract to somebody else, but when nobody has anywhere to store it... you pay someone to take it.

 

And June and July futures are still in the $20 range. I don’t think it’ll hurt that bad.

 

I just wish i had a spare oil tanker lying around that I could sit on that for a few months and make a bajillion dollars on.::

[glunn]

 

I just wish i had a spare oil tanker lying around that I could sit on that for a few months and make a bajillion dollars on.::

You should have thought of that a month ago.  

[Richie the Rally Goat]

You should have thought of that a month ago.

I wonder if you could buy one used on Craigslist?

[glunn]

 

I literally don't know how this works. Some upstream drilling company contracts to supply X barrels of oil to downstream refiners for no money? Why?

 

Negative interest rates I can sort of construct a rationale for.
 

Someone just sent me the following link that adds some color to this issue -- https://library.wilmingtontrust.com/z-featureditems/featured-2/oil-market-collapse

[glunn]

 

I wonder if you could buy one used on Craigslist?

Metal trash cans might work. And swimming pools.

 

Maybe drain lakes and add liners?

 

And everyone should get their car oil changed.

[ashbury]

Someone just sent me the following link that adds some color to this issue -- https://library.wilmingtontrust.com/z-featureditems/featured-2/oil-market-collapse

A good reminder of the worst-case of commodities trading: they might deliver the stuff to your door.

[gunnarthor]

 

A good reminder of the worst-case of commodities trading: they might deliver the stuff to your door.

My father in law actually has told me a (supposedly) true story of a friend of his that was trading in cattle futures. He made a bunch of trades and a lot of money but you are supposed not be left holding the trade when it comes due. He was on vacation and forgot about it and got a call asking where he wants all this cattle to go to. 

[Richie the Rally Goat]

My father in law actually has told me a (supposedly) true story of a friend of his that was trading in cattle futures. He made a bunch of trades and a lot of money but you are supposed not be left holding the trade when it comes due. He was on vacation and forgot about it and got a call asking where he wants all this cattle to go to.

I have a friend who trades for CHS, and I used to buy vegetables on contracts, and i can tell you that it depends on what your intention is on the trades. I used to trade for low prices to actually take delivery as a supplement to my contracts. My friend at CHS does the same.

 

Oh, and 20 million barrels of oil are anchored off the coast of California right now. There’s opportunities if you have the resources.

 

https://www.bloomberg.com/amp/news/articles/2020-04-21/oil-tankers-are-surrounding-california-with-nowhere-to-unload?sref=vuYGislZ&__twitter_impression=true

[Brock Beauchamp]

 

I literally don't know how this works. Some upstream drilling company contracts to supply X barrels of oil to downstream refiners for no money? Why?

 

Negative interest rates I can sort of construct a rationale for.
 

If no company can store your crude, it's pretty hard to sell.

 

Oil producers are still producing, but if they have no place to send it... well. 

 

What do you do with crude oil if no one wants to take it?

[Brock Beauchamp]

And I see Sconnie already took care of this conversation.

[ashbury]

And I see Sconnie already took care of this conversation.

Yeah. What threw me is not seeing the difference (relative to interest rates) between a temporary dislocation that has to clear itself up sooner if not later, versus a condition that could persist. Nobody is going to sell oil for negative values for very long - the solution for each individual driller is to stop pumping^*, and let the futures market sort itself out. Whereas, in a condition of persistent deflation, one might rationally accept a negative interest rate from a bank that has FDIC insurance and takes good care of your money. Negative spot oil looks to me like an oddity - while negative interest rates are a very bad symptom of a sick economy.

 

^{* _{Acknowledging that there is some outlay of cash in capping a well, and then also to start back up, so it's not done lightly, and thus one might accept some paradoxical pricing for a little while}}